Ohio Supreme Court Issues Decision Impacting Business Interruption Coverage for Covid-19 Losses

In Neuro-Communication Servs., Inc. v. Cincinnati Ins. Co., the Ohio Supreme Court held that a property policy covering “direct loss”, with loss defined as “accidental physical loss and accidental physical damage” required that damage to covered property be “physical in nature”. Slip Opinion No. 2022-Ohio-4379, at ¶ 17. The Court then distinguished Neuro’s loss due to Covid-19 and orders, finding that such loss sustained was not “physical in nature” and did not make Neuro’s property uninhabitable – it was “not akin to total loss of access to properties at issue…” Id. at ¶24.  With this definition in mind, the Court concluded that “direct physical loss or damage to property does not arise from (1) the general presence of Covid in the community, (2) the presence of Covid on surfaces at a premises, or (3) the presence on a premises of a person infected with Covid.” Id. at ¶ 26. The Court’s decision makes it difficult for policyholders to obtain Business Interruption coverage for Covid-19 related losses where the policy requires a “direct physical loss.

The Court’s decision does not address policy language that does not require both “direct” and “physical” loss or Communicable Disease coverage. To the extent a policyholder has such language in its policy, the Court’s decision does not limit such coverage.  A careful review of the policy language is needed in order to assess whether coverage is available, and if so, the extent of limits available.